UPDATE, 7:00 AM: CEO Philippe Dauman rejects the growing view — articulated yesterday by Time Warner CEO Jeff Bewkes — that Nickelodeon’s ratings are down because kids are watching much of the channel’s content on Netflix. “There is no silver bullet” Dauman told analysts who wanted to know about the 32% drop in Nick’s audience so far in 2012. Viacom says that Netflix can’t be the culprit: Less than 25% of TV watchers get Netflix, and the time kids spend watching Nickelodeon content on Netflix only amounts to 2% of the viewing time for the cable channel. Even if Netflix-watching kids stopped viewing the cable channel, he says, “it would have minimal impact.” Meanwhile, “we are getting nice revenues from these (subscription VOD) deals.” Dauman still believes that Nick’s woes are at least partly due to glitches in the Nielsen rating system. In addition, he says there’s been “compelling programming on some of our competitors.” Dauman says not to worry: “We’ve seen this level of impact on other major networks in the past and we’ve overcome it….This is what we do.” He says he remains confident that investments in new Nickelodeon programming — including a revival of the Teenage Mutant Ninja Turtles franchise — “will gradually build on our ratings and we will not stop until Nickelodeon gets to bigger and better places….We feel very, very good about the direction. The pipeline is extremely strong.”

Meanwhile, Dauman added his voice to the chorus of media moguls who — predictably — say that they expect to see strong sales in the television upfront ad market. “We’ve begun to see signs of recovery in the marketplace,” he says. What’s more, the ad sales in the scatter market “remain good.”

Dauman also says he’s not concerned about a potential loss of revenue at the end of this year when Paramount’s distribution deal with DreamWorks Animation expires. “We’ve had time to plan for it…There are several filmmakers who would like to see Paramount involved in the distribution of their films for a fee.” Last night DreamWorks Animation CEO Jeffrey Katzenberg said that he expects to make a decision on distribution by Labor Day.

PREVIOUS, 4:12 AM: Analysts will have to wait a little longer to hear an answer to their biggest question: What’s the latest with Nickelodeon’s ratings slump? Meanwhile they can pour over financial numbers for early 2012 that tell an upbeat, although mixed, story. Viacom generated net income of $585M, up 56% vs the period last year, on revenues of $3.3B, up 2%. Revenues pretty much matched the consensus forecast. Adjusted earnings, at 98 cents a share, handily beat the 89 cents that was expected. Revenues from Filmed Entertainment, which includes Paramount, fell 5% to $1.2B. Viacom says that worldwide theatrical fell 19% as this year’s releases, including The Devil Inside and Jeff, Who Lives At Home, were no match for last year’s Rango and Justin Bieber: Never Say Never. Still, the unit’s operating income was up 195% to $115M due to lower distribution costs. Revenues at the company’s largest unit, Media Networks, were up 5% to $2.2B with fees from domestic pay TV providers up 15% — but domestic ad sales up just 1%. All told, operating profits for the unit were up 11% to $893M. CEO Philippe Dauman says that Viacom’s results were a product of “relentless investment in our exceptional brands, and an ongoing focus on operational excellence.” The company’s $10B stock repurchase program helped to boost per-share earnings. Dauman says that Viacom returned $700M to shareholders in the quarter and reduced its debt costs.